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Investment Mortgage Options

Investment Mortgage Options

A Look at Mortgage Investment Options

When the American prime rate was closer to double digits than zero, investing in bank secured vehicles made a lot of sense. Having a certificate of deposit or three at the back of your portfolio wasn’t just sensible — it was vital. Today, though, those same types of investments don’t even keep up with the cost of inflation in many cases. If your portfolio is centered on these types of investments, you’re going to keep falling behind as the cost of living keeps going upward.

Mortgage Investment Options for Real Estate Investors

With this in mind, Amansad Financial Services stands ready to help real estate investors who are willing to look at mortgage investment options. At first, some people think that this is a risky way to invest your money because there were so many instances of default in the years since 2008. However, many of these instances came about as a result of poor lending practices by banks. The use of such practices as auto signing and rushing home buyers through the loan approval process led to many loans that were simply unsustainable. People took out loans that they had no business being approved for on the basis of their lack of savings for a down payment, their lack of verifiable income at the levels needed to maintain payments, or both. (Real Estate Investors)

The increased level of regulation governing the mortgage industry is designed to keep this sort of thing from happening again. This is why banks are so tight with their money right now; they have to look at credit scores at a particular level, meet income verification requirements and require a particular down payment. This leaves a number of investment mortgage options for private individuals with greater than $25,000 put into an investment. If you sink it into bank secured investments or government debt, though, your returns will barely rival that of inflation. If you put the money into the stock market, you risk losing everything if the business heads south. Even though stock markets are showing increases in their returns, you want to diversify your levels of risk. One reason why mortgage investment options are becoming popular is that there are many potential home buyers who have 25% or greater of purchase price to put down but lack the credit score to qualify with a bank, or are perhaps self employed and do not have the right income verification to meet the bank requirements. Or perhaps you have a existing homeowner that has excellent equity yet has been orphaned by their bank, or simply needs to refinance. These borrowers also do not meet bank qualification requirements and need a short term private mortgage to make the necessary corrections to qualify again with a traditional bank lender.

This is where you, as the investor, can step in and make a level of profit higher than what the banks make from mortgages but with a lot less risk than you face from mutual funds or the stock market. One of the most secure mortgage investment options is the first mortgage. As a private lender, if you have a buyer who can put 30 or 40 percent down, you can invest the rest secure that, if you have to foreclose, you can sell the property at a profit over your investment. However, someone who has put together a down payment that large likely has the financial acumen (and the income) to satisfy the loan, even though his credit mistakes from the past have not yet expired from his credit report. You can decide whether you want to set a fairly short term for the loan (six months to a year or so), to give the buyer time to qualify for refinancing from a traditional lender, or to go with a long term loan, which gives you a secure income for a longer period of time. No one wants to go through foreclosure, and so people will bend over backwards to ensure that their mortgage payments are made. In the event of such a unfortunate circumstance, interest would still accumulate and the property owner would be responsible for legal fees associated with a foreclosure, further protecting your investment. More protection is provided as a first mortgage lender due to the order of priority.

Looking for the Best Investment Options?

A second or third mortgage has a little less security than a first mortgage, but the upside is that you can ask for a higher interest rate. You also want to perform due diligence on the buyer, a process with which Amansad Financial Services can help you. Some people take out a second or third mortgage to put a child through law school, to buy a boat or to pay for a necessary operation. They have the means to pay for the cost over time but need the lump sum at the present time.

Different Investment Options

One type of mortgage that is becoming more popular is the blanket or inter alia loan, which covers multiple properties at once. This is attractive for you, because you have multiple properties as collateral. Some blanket loans cover several residential or several commercial properties, while others cover a blend. The limit on insured mortgages in Canada is one of the more popular reasons why buyers look for a blanket mortgage, because they don’t want to have too many mortgages in their portfolio. Whether you are looking for rural, urban, residential or commercial properties in which to make a mortgage investment, Amansad Financial Services has clients to match with you.

Another option worth looking at involves the choice between an open or closed mortgage. With a closed mortgage, the amount of principal is set at the signing of the agreement and cannot change. A buyer could take out other mortgages later if he needed additional funding, but they would be separate loans. An open mortgage allows the buyer to come back later and ask to add to the principal of the loan. You can charge a higher interest rate for this option, and based on the terms of the agreement, you have the right to use payment history and credit at that point in time in your consideration of the request. If you have a significant amount of liquidity, though, this can be a lucrative option. Whether you want to offer an open or closed mortgage, in any of the scenarios described above, Amansad Financial Services have people who are looking for your money — and to give you solid returns as a result. We have connected many satisfied investors with buyers who would not otherwise have had the chance to buy the home of our dreams. Give Amansad Financial Services Inc. a call today to start a discussion of the best way to fit mortgage investment options into your portfolio.